Correlation Between Dongbang Transport and Cube Entertainment

Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and Cube Entertainment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dongbang Transport and Cube Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dongbang Transport Logistics and Cube Entertainment, you can compare the effects of market volatilities on Dongbang Transport and Cube Entertainment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dongbang Transport with a short position of Cube Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and Cube Entertainment.

Diversification Opportunities for Dongbang Transport and Cube Entertainment

0.16

Correlation Coefficient

Dongbang Transport  Cube Entertainment

Average diversification

The 3 months correlation between Dongbang and Cube is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube Entertainment and Dongbang Transport is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dongbang Transport Logistics are associated (or correlated) with Cube Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cube Entertainment has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and Cube Entertainment go up and down completely randomly.

Pair Corralation between Dongbang Transport and Cube Entertainment

Assuming the 90 days trading horizon Dongbang Transport is expected to generate 1.75 times less return on investment than Cube Entertainment. But when comparing it to its historical volatility, Dongbang Transport Logistics is 1.18 times less risky than Cube Entertainment. It trades about 0.03 of its potential returns per unit of risk. Cube Entertainment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,606,000  in Cube Entertainment on December 25, 2024 and sell it today you would earn a total of  86,000  from holding Cube Entertainment or generate 5.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dongbang Transport Logistics  vs.  Cube Entertainment

Dongbang Transport

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dongbang Transport Logistics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dongbang Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cube Entertainment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cube Entertainment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cube Entertainment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dongbang Transport and Cube Entertainment

The main advantage of trading using opposite Dongbang Transport and Cube Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport position performs unexpectedly, Cube Entertainment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cube Entertainment will offset losses from the drop in Cube Entertainment's long position.

The idea behind Dongbang Transport Logistics and Cube Entertainment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.